MORE NEWS, 9-1: MONEY MOVING TO WIND; SOLAR SHAKEUP; GEOTHERMAL EMERGING; THE GREENEST GENERATION

MONEY MOVING TO WIND
Wind Farms Set Wall Street Aflutter
Russell Gold, August 31, 2009 (Wall Street Journal)

"After nearly a six-month lull, Wall Street is getting back into the business of financing new wind farms.

"Morgan Stanley and Citigroup Inc. have invested $100 million each…taking advantage of a brand-new federal program that is paying substantial cash grants…Bankers say this is the beginning of an active pipeline of new wind-farm financing, as well as investment in large solar installations and geothermal facilities. Project developers and Wall Street appear to be viewing the federal cash grant program as such a good deal, industry experts say, it may grow much larger than its Washington creators expected…"

3Q 2009 results should be coming soon. More growth is expected. (click to enlarge)

"…[T]he government will give a cash rebate for 30% of the cost…awarded 60 days after an application is approved…[as well as] valuable accelerated depreciation deductions, which help offset taxes…The Energy and Treasury departments…expect to spend $3 billion…through the end of 2010…[as] part of the stimulus bill…[But] requests for $800 million in grants were submitted during the first four weeks…Wall Street bankers say they expect applications to grow to $10 billion…[echoing] the $3 billion cash-for-clunkers program…

"But unlike the popular cash-for-clunkers programs, there is no spending cap on the renewable energy grants, and the government has committed to spending as much as is needed to keep renewable-energy investments flowing...[This is a sharp change from New Energy incentives before this year which] gave companies tax credits over 10 years…attractive as long as financial firms believed they would be generating taxable profits…When Wall Street imploded last year, profits turned to losses…Some of the companies most active in these deals -- including Lehman Brothers Holdings Inc. and American International Group Inc. -- were hobbled or destroyed…[T]he new cash grants...[are expected] to provide an annual return of anywhere from 9% to 15%."

New manufacturing facilities mean new production capacity looking for the financing that is becoming available which means further growth is likely. (click to enlarge)

"Most of the investments are expected to go to wind projects, because the industry is more mature and in a better position to capture limited funds…Even capital-constrained financial giant Citigroup has been drawn to wind power. In August, it made a $120 million investment in [the AES Corp. 105-megawatt, 67-turbine Armenia Mountain] wind farm…

"It's not just Wall Street banks that are attracted. Iberdrola SA, a Spanish [New Energy developer]…expects to tap $500 million in cash grants for U.S. wind projects…Additional financing from the grants would potentially benefit major wind-farm developers such as Florida utility FPL Group Inc. and large-scale solar developer Edison International [and] give a boost to [turbine and solar panel] manufacturers…Morgan Stanley recently made a $120 million investment in a Montana-based wind farm developed by Grupo Naturener SA…"


SOLAR SHAKEUP
World Solar Industry Appears Headed for a Shakeout
Nathanial Gronewald, August 12, 2009 (NY Times)

"Despite a well-publicized oversupply of products and excess manufacturing capacity for solar photovoltaic equipment and components, some solar power industry watchers are still predicting further robust growth in production capacity. But financial analysts fear numerous makers may fail over the next few years.

"Record demand for solar equipment and a shortage of polysilicon, the key ingredient for PV panels, led companies worldwide to rapidly expand their facilities just before the global financial crisis…[Demand and] prices for polysilicon, PV and thin-film solar panels have plummeted…as weaker firms close or sell off major chunks of their operations to stay alive…[But despite] a glut of manufacturing capacity and unsold equipment, at least one research firm still sees capacity growing strongly and not slowing down or shrinking…[because of] government stimulus programs, the push for action on climate change and a bounce in demand responding to fallen prices."

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"…DisplaySearch, a division of the global market research firm NPD Group, predict[s] the worldwide manufacturing capacity for solar cells will expand by 56 percent this year over 2008 levels. 2009 is seen as one of the weakest market years this decade…[with] DisplaySearch admitting that demand is down by some 17 percent…[O]thers see a decline of up to 30 percent…[Because of the 2008 buildup of cell manufacturing capacity, DisplaySearch sees supply growing 56 percent this year, leading to] capacity expanding at a compound annual growth rate of about 49 percent a year up to 2013…

"[Navigant Consulting doubts capacity has expanded as much as company announcements suggest]…But all agree that the rapidly descending prices, fueled further by aggressive cost cutting by some of the industry's leading players, are causing a bit of upheaval in the solar technology field…Advent Solar, DayStar Technologies and Blue Square Energy as among the [U.S.] solar companies…[that] could be shaky…[S]tronger solar manufacturers are viewed as unlikely to acquire weaker rivals…[T]hat would only add to their own inventory problems…[L]arge technology companies not traditionally involved in solar power seem to be moving in…[A] major German auto parts builder recently swallowed up…Aleo Solar and ErSol Solar Energy."

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"First Solar Inc. has been given the title of largest cell manufacturer in the world…[with an estimated 1 gigawatt] production capacity…[and a $180 million Q2 2009 profit]…But Navigant's data show that last year, Q-Cells was the largest maker in terms of sales. That company is now hurting…[because of the global economic downturn and] the exit of Spain as a major destination for sales…And though Japan has long been the leading home of solar manufacturing capacity, China…[two years became] the world leader in solar production capabilities, although Japanese makers still have plans to rapidly grow output…Suntech is poised to emerge as the global leader…

"Thin-film solar technologies are also expected to expand [Suntech’s] market share…[T]hin film's share of the overall solar power industry [may] grow to 30 percent of cell capacity by 2013. Some experts predict that 2013 will see an explosion of solar power installations worldwide, while some see a strong rebound coming even sooner, even as early as 2010…But given the solar industry's relative youth and its history of wild up-and-down swings and adjustments, Navigant…warns against following too closely predictions on the future size and shape of the solar industry in the years to come. The feared "shakeout" in the industry could simply be a temporary return to less certain times…"


GEOTHERMAL EMERGING
The Importance of Geothermal Power
John Malone, August 27, 2009 (The Moderate Voice)

"…Geothermal power just hasn’t gotten the same respect [as wind and solar energies]. That could be changing, as both the Obama Administration and Silicon Valley are considering the heat under the ground as a potentially huge source of clean, domestic U.S. energy, but recent setbacks are calling into question how much geothermal can contribute. Given the potential benefits, we should be doubling our efforts…

"Some background: All thermal power plants use the same basic process. A heat source (burning coal or gas, uranium, concentrated solar energy)…[turns] water into steam, and the energy released turns a turbine that produces electricity…[But] geothermal steam comes directly from the ground. Water percolates down through cracks in the ground and is heated to the boiling point by hot rocks underground…[sometimes] as a geyser…and the resulting steam is drawn up via a well to a turbine."

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"This makes for, in principle, the ideal alternative energy source. Geothermal power releases virtually no CO2 or pollutants. Crucially, geothermal provides baseload power — wind and solar power are better suited as peaking technologies, as they are dependent on energy sources that wax and wane…Geothermal power is on 24 hours a day, 365 days a year…[and] can have utilization rates up to 98%…[In national security terms]…[t]here is no more domestic source of energy than the actual ground underneath us.

"…There are only a few places in the U.S. where you can find shallow groundwater hot enough to get steam directly from the ground…[but] Enhanced Geothermal Systems (EGS) make use of the fact that, if you drill deep enough, any bedrock in the world gets hot enough to boil water. Basically, EGS involves drilling a well into deep, hot, dry rock; drilling a second well nearby to the same depth; fracturing the rock between those two wells enough to allow water to pass between them; and then pumping water down the first well and allowing it to percolate through the hot fractured area to the second well, where it will come back to the surface as superheated steam. The potential for EGS in the U.S. is enormous. A 2006 MIT report concluded it could provide 100,000 MW of power by 2050."

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"…Cost is the main [EGS] hurdle. Oil and gas companies now measure well depths in miles, but these are wells drilled through relatively soft rock, not the hard granites that are best suited for EGS. If not managed properly, rocks could lose their heat — eventually, pumping water through a hot rock system could bring the heat gradient down to the point that new wells need to be drilled. There has also been some concern about earthquakes. In 2006, an EGS pilot project in Switzerland set off a 3.4 magnitude quake.

"…[T]hese hurdles are all surmountable, and given the huge benefits it could bring, there is already a surge in investment — both public and private…Google laid down an $11 million investment for early-stage research…[Thanks to Nobel Laureate Secretary of Energy, Steven Chu…Obama’s stimulus plan set aside $400 million for pure geothermal R&D. And…[a] recent NYU study found that as little as $3 billion in R&D development could make EGS cost-competitive with fossil fuel plants…[W]idespread application… is still a ways off. But…traditional [and] EGS…[can] be used alongside…wind and solar to diversify…There is no silver bullet…It’s better to think in terms of silver buckshot…[One solution is] right under our feet."


THE GREENEST GENERATION
Who's the Greenest Generation? New Study Finds Out Who Isn't…
Matthew Wheeland, August 28, 2009 (GreenBiz via Reuters)

"…There is plenty of promising news [of a sustainable business future] coming out of universities, as we found at the beginning of this year with our [GreenBiz] State of Green Business report. But a recent survey of young adults in Britain gives us pause.

"The study, commissioned by IBM, found that young adults in Generation Y -- the folks currently aged 18-24 -- had both the highest levels of awareness of environmental issues, and were the biggest wasters of energy and water in the country…"

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"Among the findings: 72 percent of Gen-Y members…[say] they wasted water on a regular basis. Fifty-six percent said they leave the tap water running while brushing their teeth, and 40 percent allow the shower to run for "a few minutes" before getting in…IBM estimates that leaving water running for two minutes during toothbrushing alone wastes about 12 liters of water, which the company extrapolates to equal over 236 million liters (more than 62 million gallons) wasted per week.

"In terms of awareness of energy use, 55 percent of young adults couldn't correctly guess whether a clothes dryer or an incandescent lightbulb used more energy…[T]his lack of awareness isn't limited just to young people; sure, 55 percent couldn't tell you which of four appliances used the most electricity, but of the whole population surveyed, 43 percent couldn't answer the same question, and 25 percent overall said an electric kettle used more water than a clothes dryer."

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"These survey results aren't -- or shouldn't be -- surprising…[T]here are many dozens of highly innovative green businesses that are far out in front in terms of addressing environmental impacts. That is also true for individuals -- the "no impact" men and women of the world…[But] those businesses (and those individuals) are in the tiniest sliver of the minority…

"…I oscillate between optimism and despair about this lack of action on the part of the most mainstream of businesses and individuals…[W]hen I feel optimistic, I like to believe that the profound upswing in green business practices, in green energy, in green behaviors…is going to snowball, picking up enough pace to help us avoid the worst effects of climate change…[GreenBiz] would like to know [readers’] thoughts…"